Leveraging M&A Opportunities in Fund Management Through Lift-Outs

In the ever-changing world of fund management, the industry is undergoing a rapid transformation. Fueled by technological advances, shifting investor interests, and a fiercely competitive market, businesses are on the hunt for strategic approaches to grow and scale. One path that’s gaining attention is mergers and acquisitions (M&A), with a particular focus on lift-outs. This strategy, which involves transitioning a team or business unit from one company to another, has become a preferred method. It’s a strategic and cost-effective way to tap into new talent, gain expertise, and establish client relationships swiftly.

Many fund managers are increasingly using strategic acquisitions as a means to ramp up their operations, break into new markets, and keep up with the ever-evolving demands of today’s investment landscape. Lift-outs have emerged as a nimble and precise alternative, making it possible for firms to hone in on specific business needs without dealing with the full-scale complexities of traditional mergers. Offering more flexibility and speed, lift-outs provide a feasible solution for companies striving to remain competitive and successful in an ever-changing market.

Looking ahead to 2025, experts predict that M&A momentum will only keep growing. Several drivers are fueling this trend, including ongoing digital transformation efforts and a shift in client expectations towards personalized investment solutions. As fund managers consolidate and innovate, they will likely consider strategic acquisitions as a crucial route for expansion.

The forecast for market dynamics suggests that as fund managers integrate more tech capabilities, the race for market share will heat up. Upcoming M&A activities are expected to target firms with strong technological frameworks and inventive solutions that can quickly adapt. Digital transformation plays a critical role here. As the demand for digital solutions to enhance customer experiences and boost operational efficiency grows, companies embracing analytics, AI, and automation will lead the charge into 2025. Consequently, M&A will likely become a pivotal approach for gaining these critical capabilities quickly.

Now let’s talk about lift-outs. Unlike traditional M&A, which often involves integrating entire businesses—a process that’s usually costly and potentially disruptive—lift-outs provide a more focused path. These deals specifically target particular business operations or teams and avoid overhauling the entire company.

This tightly focused method allows buyer companies to specifically target certain operational segments like transfer agency or fund administration without the need for a complete organizational restructure. It achieves company goals while avoiding unnecessary complexities.

Moreover, lift-outs lend efficiency to the process. By focusing on areas that matter, integration is streamlined, cutting costs by avoiding redundant tech stacks and surplus staffing. This offers speed and scalability, enabling firms to swiftly integrate crucial functions while staying nimble. It lets organizations optimize non-core operations without upsetting their core functions or company culture—a practical answer for firms looking to adapt swiftly and effectively.

SS&C, a leader in this space, is actively engaging in identifying and bringing on board middle- and back-office teams, enhancing their service range and expanding their client reach. Unlike traditional M&A approaches, SS&C focuses on directly integrating these teams. By leveraging their know-how, they boost operational efficiency for asset managers. Their Lift-Out Solutions are designed to ensure:

1. Seamless Integration: SS&C has a track record of onboarding and transitioning teams with minimal fuss.

2. Operational Efficiency: They offer predictable costs by taking on staff-related expenses and smoothing out processes.

3. Technology Enablement: Legacy systems join forces with SS&C’s advanced tech platforms.

4. Automation & Innovation: Blue Prism automation cuts down manual work and boosts productivity.

5. Data Security & Compliance: A secure private cloud infrastructure ensures accessible data and regulatory compliance.

6. Career Advancement: Employees find long-term career paths within SS&C, becoming part of a service-centric organization rather than just another cost center.

Lift-outs have proven to be invaluable for fund managers, providing tailored and agile M&A options. SS&C has a strong track record, having completed over 65 acquisitions and lift-outs, integrating more than 20,000 employees—2,000 of whom came through lift-outs by 2023. Building on this momentum, SS&C bolstered its market standing in 2024 with major deals. By directly acquiring and managing middle- and back-office teams, SS&C empowers fund managers to navigate the changing landscape with assurance, promoting long-term success through operational excellence and innovation.

For a deeper dive into how SS&C’s Lift-Out Services could benefit your business, download their informative eBook.